GENERAL COMMENTS ON THE USE OF "FORM 5" IN ARGENTINA (ENGLISH VERSION)

• Jurisdiction: Derecho Internacional

MINING LAW & INVESTMENT IN LATIN AMERICA
(April 2003)
CHAPTER 3A
GENERAL COMMENTS ON THE USE OF "FORM 5" IN ARGENTINA (ENGLISH VERSION)


Daniel Armando Bianchi
Estudio Allende & Brea
Buenos Aires, Argentina

The decision of certain public and private entities, directed to develop forms for the drafting of agreements and related mining business documents, has been a positive contribution to the legal practice in the last decade. The use of these models, guidelines or forms became widespread in the world. The standard contents have allowed a higher degree of consistency to the documents and agreements as well as certain and speedy legal procedures.

In the case of "Form 5", prepared by the Rocky Mountain Mineral Law Foundation, the form has served the purpose of taking into account different juridical situations which may arise in the negotiation and drafting of joint ventures. It has allowed the contracting parties to avoid incurring in omissions or errors in essential clauses which may be the source of future legal conflicts. Furthermore, it assures a unified interpretation of the text. The use of these kind of guidelines or forms of different types, has been fully acknowledged in modern mining law. This is true not only in the case of agreements but also in the petition and concession on mining rights by the relevant authorities. Its also a helpful tool in the area of technical or statistical information, environmental studies and other administrative purposes, so that the requests of the parties may be properly channeled, thus resulting in a legal and administrative practice which should be pursued and extended to other areas of the mining activities.

In Argentina, in spite of these practical advantages, "Form 5" has had little application in mining activities. This type of association agreement which in Argentina may be considered equivalent to the so called Transitory Union of Companies (TUC) is regulated by a special Chapter of the Commercial Companies' Act N° 19550. This lack of application in our country under the format of TUC, may be attributed to the relatively few big scale mhiing enterprises which justify the use of an association of companies. Another reason could be that "Form 5" was developed for US practice, (operating within US law boundaries). Even those foreign companies which negotiate joint ventures with regard to mining assets located in Argentina together with local companies, the wording of the agreements drafted as TUC do not strictly follow the form, since a large number of amendments and additions have to be made to reflect the will of the parties and local law. Therefore, the text of "Form 5" has only been in use in our country as a source of information to draft specific aspects of the TUC, which, by the way, is one of the most significant accomplishments of "Form 5".

In the case of mining agreements between small and medium size local companies devoted, in...